| Stockholders' Equity | Note
8: Stockholders’ Equity (a) Preferred
Stock The
Company is authorized to issue 5,000,000 shares of $0.01 par value preferred stock with such designations, rights and preferences
as may be determined by the Board of Directors. Of our authorized preferred stock, 250,000 shares have been designated as Series
A Junior Participating Preferred Stock and 8,000 shares have been designated as Series B Convertible Preferred Stock. The Series
B Convertible Preferred Stock has a stated value $1,000 per share. The
Company is authorized to issue 8,000 Series B Convertible Preferred Stock, no par value, stated value $1,000 per share. As of September
30, 2019, the Company had 783 shares of Series B Convertible Preferred Stock outstanding. Each such Preferred Share is convertible
into 114 shares of common stock. Pursuant
to a registration statement relating to a rights offering declared effective by the SEC on February 14, 2019, AIM distributed to
its holders of common stock and to holders of certain options and warrants as of February 14, 2019, at no charge, one non-transferable
subscription right for each share of common stock held or deemed held on the record date. Each right entitled the holder to purchase
one unit, at a subscription price of $1,000 per unit, consisting of one share of Series B Convertible Preferred Stock with a face
value of $1,000 (and immediately convertible into common stock at an assumed conversion price of $8.80) and 114 warrants with an
assumed exercise price of $8.80. The warrants are exercisable for five years after the date of issuance. The net proceeds realized
from the rights offering were approximately $5.3 million. During the nine months ending September 30, 2019 4,529 shares of Series
B Convertible Preferred Stock were converted into common stock. (b) Common
Stock The
Company is authorized to issue 350,000,000 shares of $0.001 par value common stock with specific limitations and restrictions on
the usage of 8,000,000 of the 350,000,000 authorized shares. In
August 2016, the Company effected a 12-to-1 reverse stock split of the outstanding shares, in order to become compliant with the
NYSE regulations. This did not affect the number of authorized shares. On
September 6, 2016, we entered into a Securities Purchase Agreement (the “September Purchase Agreement”) with certain
investors for the sale by us of 75,758 shares of our common stock registered under our S-3 shelf registration statement on at a
purchase price of $66.00 per share. Concurrently with the sale of the common stock, pursuant to the September Purchase Agreement,
we also sold unregistered warrants to purchase 56,818 shares of common stock for aggregate gross proceeds of $5,000,000. Subject
to certain ownership limitations, the warrants are initially exercisable six-month after issuance at an exercise price equal to
$88.00 per share of common stock, subject to adjustments as provided under the terms of the warrants. The warrants are exercisable
for five years from the initial exercise date. Pursuant to an engagement agreement, we paid our placement agent an aggregate fee
equal to 7% of the gross proceeds received by us from the sale of the securities in the offering and granted to our placement agent
or its designees warrants to purchase up to 5% of the aggregate number of shares sold in the transactions amounting to 3,788 unregistered
warrants. The placement agent warrants have substantially the same terms as the investor warrants, except that the placement agent
warrants will expire on September 1, 2021 and have an exercise price equal to $82.50 per share of common stock. On
February 1, 2017, we entered into Securities Purchase Agreements (each, a “February Purchase Agreement”) with certain
investors for the sale by us of 41,322 shares of our common stock at a purchase price of $24.50 per share. Concurrently with the
sale of the common stock, pursuant to the February Purchase Agreement, we also sold unregistered warrants to purchase 30,992 shares
of common stock for aggregate gross proceeds of approximately $1,000,000. The warrants have an exercise price of $33.00 per share,
are exercisable six months after issuance, and will expire five years from the initial exercise date. Pursuant to an engagement
agreement, we paid our placement agent an aggregate fee equal to 7% of the gross proceeds received by us from the sale of the securities
in the offering and granted to our placement agent or its designees warrants to purchase up to 5% of the aggregate number of shares
sold in the transactions amounting to 2,066 unregistered warrants. The placement agent warrants have substantially the same terms
as the investor warrants, except that the placement agent warrants will expire on February 1, 2022 and have an exercise price equal
to $30.25 per share of common stock. The Company subsequently registered the shares issuable upon exercise of the warrants on Form
S-1. The
Board of Directors approved up to $500,000 for all directors, officers and employees to buy Company shares from the Company at
the market price. As of the last issuance dated November 5, 2018, the Company had issued all the authorized shares for this program
(23 shares) at prices between $8.80 and $30.36 per share directly to executives and employees, for $373,852 in a series of private
transactions pursuant to stock purchase agreements. On
June 1, 2017, the exercise price of Warrants issued in September 2016 was changed to $22.00. As a result, the warrant holders exercised
these Warrants and purchased 53,864 shares of Company common stock. The Company realized net proceeds of $1,055,000 from this exercise.
In conjunction with the foregoing, the Company also issued 53,864 series A warrants with an exercise price of $26.40 per share,
an initial exercise date of December 1, 2017 and expiring March 6, 2022 (the “Series A Warrants”) and 172,364 series
B warrants with exercise price of $26.40, an initial exercise date December 1, 2017 per share and expiring March 1, 2018. The foregoing
transactions are hereinafter referred to as the “Exchange Transaction”. In addition, on July 10, 2017, the warrant
holders exercised the remaining 2,955 warrants issued in September 2016 and purchased 2,955 shares of common stock. The Company
realized net proceeds of $65,000 from this exercise. In conjunction with the foregoing the Company issued 2,955 Series A Warrants
and 9,455 Series B Warrants (with an exercise price of $26.40 and an initial exercise date January 10, 2018 on the three-month
anniversary of the of the initial exercise date). Pursuant
to an engagement agreement, the Company paid its placement agent an aggregate fee equal to 7% and 10.5%, respectively, of the gross
proceeds received by the Company from the sale of the securities in the offerings and granted to its placement agent or its designees
warrants to purchase up to 5% of the aggregate number of shares sold in the transactions amounting to 3,788 and 2,449, respectively,
unregistered warrants. The placement agent warrants have substantially the same terms as the investor warrants, except that the
3,788 placement agent warrants issued in September 2017 will expire September 1, 2021 and have an exercise price equal to $82.50
per share of common stock and the 2,449 placement agent warrants issued in June 2017 will expire June 1, 2022 and have an exercise
price of $27.50. On
August 23, 2017, the Holders of the Series A Warrants and Series B Warrants exchanged all of their Warrants for new warrants (respectively,
the “Series A Exchange Warrants” and the “Series B Exchange Warrants” and, collectively, the “Exchange
Warrants”) identical to the Warrants except as follows: The exercise price of both Exchange Warrants is $19.80 per share,
subject to adjustment therein, and the number of Series B Exchange Warrants issued was proportionately reduced to an aggregate
of 63,637 warrants so that all Exchange Warrants in the Exchange Transaction do not exceed 19.9% of the number of the Company’s
issued and outstanding shares of Common Stock as of May 31, 2017, the date of the Exchange Transaction offer letters. The issuance
of the Exchange Warrants by the Company and the shares of Common Stock issuable upon exercise of the Exchange Warrants is exempt
from registration pursuant to Sections 3(a)(9) and 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
The 63,637 warrants with an expiration date of March 1, 2018 and an exercise price on $19.80 were exercised in January and February
2018. The Company realized proceeds of $1,260,000 from these exercises. On
May 2, 2019, the Company entered into an agreement with the holders of 103,410 warrants (classified as liability) pursuant to which
the warrant exercise price was reduced to $6.60 and all of the warrants were exercised, reducing the liability attributed to the
warrants by approximately $404,000, and the Company realized about $682,000 in net proceeds, resulting in an addition to stockholders’
equity of approximately $1,086,000. In
June 2019, the Company effected a 44-to-1 reverse stock split of the outstanding shares, in order to become compliant with the
NYSE regulations. This did not affect the number of authorized shares. All references to shares of common stock, options, warrants
and preferred stock have been adjusted herein to give effect to this reverse stock split. On
July 19, 2019, the Company entered into a new Equity Distribution Agreement (the “Distribution Agreement”), with Maxim
Group LLC (“Maxim”), pursuant to which the Company may sell from time to time, shares of its common stock, $0.001 par
value per share (the “Shares”) through Maxim, as agent (the “Offering”). Prior thereto, the Company and
Maxim terminated the prior 2012 Equity Distribution Agreement (pursuant to which the Company had sold $1,098,000 worth of Shares).
On July 19, 2019, the Company filed a prospectus supplement with the Securities and Exchange Commission (the “SEC”)
in connection with the Offering under its existing Registration Statement on Form S-3 (File No 333-226059), which became effective
on August 3, 2018, related to the sale of Shares having an aggregate offering price of up to $4,508,244. As of September 30, 2019,
the Company sold 905,869 shares under the Distribution Agreement for a total of $2,553,079 which includes a 3.5% fee to Maxim of
$89,358. On
September 27, 2019, the Company closed an public offering underwritten by A.G.P./Alliance Global Partners, LLC (the “Offering”)
of (i) 1,740,550 shares of Common Stock; (ii) pre-funded warrants exercisable for 7,148,310 shares of Common Stock (the “Pre-funded
Warrants”), and (iii) warrants to purchase up to an aggregate of 8,888,860 shares of Common Stock (the “Warrants”).
The shares of Common Stock and Warrants were sold at a combined Offering price of $0.90, less underwriting discounts and commissions.
Each Warrant sold with the shares of Common Stock represents the right to purchase one share of Common Stock at an exercise price
of $0.99 per share. The Pre-Funded Warrants and Warrants were sold at a combined Offering price of $0.899, less underwriting discounts
and commissions. The Pre-Funded Warrants were sold to purchasers whose purchase of shares of Common Stock in the Offering would
otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99%
of the Company’s outstanding Common Stock immediately following the consummation of the Offering, in lieu of shares of Common
Stock. Each Pre-Funded Warrant represents the right to purchase one share of Common Stock at an exercise price of $0.001 per share.
The Pre-Funded Warrants are exercisable immediately and may be exercised at any time until the Pre-Funded Warrants are exercised
in full. A registration statement on Form S-1, relating to the Offering was filed with the SEC and was declared effective on September
25, 2019. As
part of the cash conservation program adopted on August 28, 2017, starting with the month of September 2017, the directors agreed
to defer 100% of their fees until cash is available. In consideration of this deferral, 5,137 options were issued to each of the
two independent directors in February 2018 with an exercise price of $16.20; 3,456 options were issued to each of the two independent
directors in May 2018 with an exercise price of $13.20, and 2,230 options were issued in July 2018 with an exercise price of $13.64.
All of the foregoing options and the options discussed below are exercisable for a period of 10 years with a vesting period of
three years. This program was suspended as of July 15, 2018 and all remaining deferred fees were paid in July 2018. This Program
was reactivated as of August 16, 2018 with the understanding that options would not be issued on the deferred amounts until the
2018 Equity Incentive Plan was approved by the stockholders and the securities issuable thereunder were registered with the SEC.
The 2018 Equity Incentive Plan was approved by the stockholders and the securities issuable thereunder were registered with the
SEC and, on October 17, 2018, 3,927 options were issued to each of the two independent directors with an exercise price of $9.68
for a period of ten years with a vesting period of one year. On January 28, 2019, an aggregate of 11,698 options were issued to
each of the directors with an exercise price of $9.68 for a period of ten years with a vesting period of one year for the deferral
of fees and for chairing various committees, respectively. Also,
as part of the cash conservation program adopted on August 28, 2017, starting with the month of September 2017, certain officers
agreed to defer 40% of their salaries until cash is available. In consideration of this deferral, 20,102 options were issued to
these officers in February 2018 with an exercise price of $16.20; 13,618 options were issued to these officers in May 2018 with
an exercise price of $13.20, and 8,847 options were issued to these officers in July 2018 with an exercise price of $13.64. This
program was suspended as of July 15, 2018 and all remaining deferred salaries were paid on July 2018. This Program was reactivated
as of August 16, 2018 for 50% of their salaries with the understanding that options would not be issued on the deferred amounts
until the 2018 Equity Incentive Plan was approved by the shareholders and the plan registered with the SEC. The 2018 Equity Incentive
Plan has been approved by the shareholders and registered with the SEC and on October 17, 2018, 18,380 options were issued to these
officers with an exercise price on $9.68 for a period of ten years with a vesting period of one year. On January 28, 2019, 27,570
options were issued to each of these officers with an exercise price of $9.68 for a period of ten years with a vesting period of
one year. Also,
as part of the cash conservation program adopted on August 28, 2017, all employees agreed to be paid 50% of their salaries in the
form of unrestricted common stock of the Company. Starting with the month of September 2017, the salaries of all the employees
of the Company were paid 50% in the form of unrestricted common stock of the Company. The total number of shares issued as of June
30, 2018 to the employees under this program was 48,111 shares at stock prices ranging from $13.64 to $24.20 per share. This program
was suspended by the Board of Directors on June 30, 2018. On
March 24, 2018, the Company sold 28,409 shares of common stock under its S-3 shelf registration. The Company realized net proceeds
of $475,000 from this stock offering and paid $25,000 in placement agent fees. On
April 20, 2018, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) with certain investors
(the “Investors”) for the sale by the Company of an aggregate of 150,000 shares (the “Common Shares”) of
the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $17.16 per
share. Concurrently with the sale of the Common Shares, pursuant to the Purchase Agreements the Company also sold 150,000 warrants,
50% of which are Class A Warrants and 50% of which are Class B Warrants (collectively, the “Warrants”). The Company
received gross proceeds from the sale of the Warrants solely to the extent such Warrants are exercised for cash. Both classes of
Warrants will not be exercisable until six months after issuance and will have an exercise price of $17.16 per share, subject to
adjustments as provided under the terms of the Warrants. The Class A Warrants and Class B Warrants will expire, respectively, two
and five years after the date on which they are first exercisable. The closing of the sales of these securities under the Purchase
Agreements took place on April 24, 2018. The Company received net proceeds from the transactions of $2,343,820 after deducting
certain fees due to the placement agent and the Company’s transaction expenses. The
2009 Equity Incentive Plan, effective June 24, 2009, as amended, authorized the grant of non-qualified and incentive stock options,
stock appreciation rights, restricted stock and other stock awards. A maximum of 500,000 shares of common stock was reserved for
potential issuance pursuant to awards under the 2009 Equity Incentive Plan. The 2009 Equity Incentive Plan terminated on June 24,
2019. During 2018, there were 106,255 options granted by the Company under this Plan The
2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance
Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of 159,091 shares of common stock
is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018
Equity Incentive Plan will continue in effect for a period of 10 years from its effective date. On October 17, 2018, the Board
of Directors issued 26,234 options to the officers and directors at the exercise price of $9.68 expiring in 10 years, and on November
14, 2018, the Board of Directors issued 23 options to each employee, officer and director at the exercise price of $9.68 expiring
in ten years. On January 28, 2019, 39,268 options were issued to the officers and directors with an exercise price of $9.68 for
a period of ten years with a vesting period of one year. |
